Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Cordray's Power Play an Agency Director Can't Overrule a President

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Cordray's Power Play an Agency Director Can't Overrule a President

Article excerpt

With all the crazy news last week - more sexual abuse allegations, more Trump tweets, more warmongering from North Korea - you might have missed the constitutional crisis over at the Consumer Finance Protection Bureau. The story hardly made waves, but it illustrated once again the dangers of concentrating power in the hands of an unaccountable few.

Created by the 2010 Dodd-Frank Act, the CFPB has sweeping authority over the financial-services industry. Not only did Dodd-Frank centralize enforcement of existing consumer-protection laws within the bureau, it also gave it wide discretion to regulate non-bank institutions that it believes are engaging in unfair practices.

That may sound good at first blush, but there is an important problem with the structure of the CFPB: It is more or less unaccountable to anybody in the government. For starters, it is an independent agency, meaning that the president can remove the director of the CFPB only for cause (as opposed to his discretion, which is the standard for most agencies). Additionally, the CFPB does not rely upon Congress for funding, instead drawing resources from the Federal Reserve.

These sorts of institutional mechanisms are not unprecedented. Congress has in the past created agencies in this fashion to insulate them from political interference. The main difference is that, historically, such agencies are not run by a single person. Rather, power is separated among members of a board. The CFPB, on the other hand, is under the aegis of a single director. When you combine the director's independence with the agency's wide mandate to regulate the financial services industry, it is not an overstatement to say that CFPB director is one of the most powerful positions in the entire federal government.

But, apparently, this was not enough power for former director Richard Cordray, who stepped down last week to get ready to run for the governorship of Ohio. He claimed that, as CFPB director, he could name his temporary successor. And so, the day he resigned from the CFPB, he promoted his chief of staff Leandra English to be deputy director, setting her up to become acting director. …

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